More States Participating in Voluntary Disclosure Program
Eight more states have joined in the Multistate Tax Commission Voluntary Disclosure Program, a program beneficial for taxpayers who sell through online marketplace arrangements. The voluntary disclosure program is designed to encourage the future collection of sales, use, income and franchise tax from taxpayers, while allowing relief of various taxes, depending on the state. Read more.
However, many online sellers working through fulfillment centers, may not know how to locate where they have inventory being stored and whether or not they have a filing obligation. Noted in Amazon Seller Central, a seller can pull the Inventory Event Detail Report to identify where inventory is being stored before sale. The steps are: Seller Central – Reports – Fulfillment – Inventory Event Detail Report
Currently twenty-three states and Washington D.C. are participating in the program:
(The highlighted states have an Amazon fulfillment center.) States with a * were added after our previous announcement.
- Colorado will waive any back tax liability for uncollected sales/use tax. However, Colorado will not waive the back tax liability for income tax beyond its normal four-year look-back period. Colorado notes that it already has a small seller income tax nexus exception for sales less than $500,000 into the state.
- Connecticut is requesting customer lists for the past three years from online retailers. Failure to provide the list will result in a $500 penalty. These notices are being sent out with the online retailer being provided with the opportunity to provide the information or register for sales tax.
- * District of Columbia’s standard look-back period is 3 years for sales/use and income/franchise tax. D.C. will consider granting shorter or no look-back period for applications received under this initiative.
- * Florida
- * Massachusetts requires compliance with its standard 3-year look-back period; this look-back period in a particular case may be less than 3 years, depending on when vendor nexus was created. Massachusetts also requires that vendors register, file and pay electronically through Mass Tax Connect, in compliance with TIR 16-9.
- * Minnesota’s customary look-back period is 3 years for sales/use tax and 4 years (3 look-back years and 1 current year) for income/franchise tax. Minnesota will grant shorter look-back periods to the time when the marketplace seller created nexus.
- * Missouri
- Nebraska will consider waiving back tax liability for uncollected sales/use tax and income tax.
- New Jersey notes that the storage of inventory by a partnership or a sole proprietor in New Jersey does not trigger nexus for gross income taxes.
- North Carolina will consider applications for participation in the initiative made by all online marketplace sellers, including those that have been contacted by the Department concerning their liability or potential liability for sales and use taxes, income, and franchise taxes.
- South Dakota imposes sales/use tax but does not impose income tax.
- * Tennessee’s business tax, as well as sales/use tax and franchise and excise tax, are included in this initiative.
- * Texas
- * Wisconsin will require payment of back tax and interest for a lookback period commencing January 1, 2015 for sales/use tax, and including the prior tax years of 2015 and 2016 for income/franchise tax.
Contact your Eide Bailly professional or a member of our State and Local Tax Team to learn more.